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The first quarter of 2025 saw heightened economic, geopolitical, and market volatility in the U.S., driven by slowing data, rising global tensions, and policy uncertainty. This led to a reversal of the “Trump trade,” falling Treasury yields, and equity market corrections. After a strong two-year rally, the S&P 500 dropped 4.3%—its worst quarter since Q3 2022. Most major indices corrected over 10% from their highs, and many fell below key technical levels. While large-cap growth initially held up, selling spread broadly, with small-cap sectors hit hardest.
Globally, economies like China and Europe saw renewed stimulus. In the U.S., housing inventories rose, mortgage rates dipped, and signs of labor softening emerged. The Fed held rates steady amid conflicting signals, projecting slower growth and higher inflation.
- Broad Market (S&P 500): -4.3% 1Q | +8.2% last 12 months
- Small Companies (Russell 2000): -9.5% 1Q | -4.02% last 12 months
- International Stocks (EAFE): +9.9% 1Q | +4.4% last 12 months
- Emerging Markets (MSCI EM): +3.0% 1Q | +8.7% last 12 months
- Bonds (Barclays Agg): +2.8% 1Q | +3.1% last 12 months
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First Quarter 2025 Review & Outlook
source: NASDAQ Market Intelligence Desk Team
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